Experts predict rebound in wine prices, plantings

Thursday

Jan 26, 2012 at 12:01 AM

SACRAMENTO - The U.S. wine industry is emerging from a decade marked by supply surpluses, low prices and the Great Recession and now sees explosive growth in diverse array of wine products that promises to support higher prices for both wine and grapes.

Reed Fujii

SACRAMENTO - The U.S. wine industry is emerging from a decade marked by supply surpluses, low prices and the Great Recession and now sees explosive growth in diverse array of wine products that promises to support higher prices for both wine and grapes.

That's the consensus Wednesday from industry experts and officials gathered this week at the Sacramento Convention Center for North America's largest annual wine and grape trade show.

And it's good news for San Joaquin County grape growers and the more than 80 Lodi-area wineries and tasting rooms that trade on the fruit from those vineyards.

"We're seeing very strong demand for Lodi grapes and Lodi wine," said Stuart Spencer, program manager for the Lodi-Woodbridge Winegrape Commission.

As the state's leading producer of zinfandel, the area is benefiting from growing consumer demand for old vine zinfandel as well as the new category of sweet red wine blends, which often contain a large proportion of that varietal.

The past year contained a lot of surprises, said Jon Fredrikson a noted wine consultant who addressed a packed ballroom with seating for 2,400 at the annual State of the Wine Industry presentation.

"It has been a wild, tumultuous time," he said.

Shipments of wine to the U.S. market totaled 345 million cases last year, up a notable 4.5 percent from the year before.

Part of that was driven by the emergence of wildly popular new wines, particularly moscato, sweet white wines based on muscat grapes and the sweet red wine blends. But there has also been a burst of new wine products and sales channels adding to the froth, Fredrikson said.

As sales boomed, however, wine supplies were constrained.

During the global wine surplus of the past decade, vineyards were removed, farmers found other profitable crops to grow and last fall's California grape crop is estimated at 3.2 million tons, down about 7 percent from the average of the past six years, said Nat DiBuduo, president of Allied Grape Growers, a Fresno based cooperative.

"It looks like we're on the cusp of shortage," he said.

And with U.S. wine consumption likely to outstrip production for at least the next three years, DiBuduo said grape growers should consider revving up their operations.

"Get off that bicycle, get on that Harley," he suggested with a smile.

Wineries are offering contracts to growers to plant and produce winegrapes, particularly in the southern San Joaquin Valley.

DiBuduo did caution moderation, not wanting to repeat the overplanting of vineyards in the late 1990s that contributed to the past decade of oversupply.

Inventories of California wine on the bulk market have dwindled, said Steve Fredricks of Turrentine Brokerage, a wine dealer.

In general, bulk wines are at their lowest levels in 11 years, he said.

The challenge for wine producers will be securing adequate supplies and controlling prices to keep their businesses growing and profitable.

"How will you adapt to this change from excess to shortage?" Fredricks asked.

Randall Lange, a principal of LangeTwins Vineyards and Winery in Lodi, welcomed the change. He, like many winery owners in the Lodi area, own their own vineyards.

"This is nothing but good news for the Lodi growers, nothing but good news for San Joaquin County," he said.

After five years or so of grape prices that gave growers little or no return, Lange said the market swing is a chance to recoup some of those losses and reinvest in their farms.